Boiled
Frogs
by Charles V. Lemmon
Instead
of talking about bulls or bears or pigs, let's consider the frog
aspects of the current merger & acquisition market.
It
is well known that you can't boil a frog by throwing it in boiling
water, because it will jump out. Instead, you put the frog in
a pot of cool water and then put the pot on the stove. As the
water temperature rises, the frog relaxes, goes to sleep and,
well, the frog is dead long before the water actually boils.
It
may be much the same by being a business owner in the current
market. Here we are, happy and comfortable. Ever so relaxed. Suffused
with the glow of capital gains.
In
this environment, perhaps it is time to identify new primary goals:
- To
be purchased
- To
cash out
It
is better to be swallowed up by a corporate behemoth and walk
away with a boatload of money, than to be slowly boiled in the
pot of complacency.
Remember
when you marveled that Microsoft bought upstart Hotmail for hundreds
of millions of dollars? Remember when upstart Mercantile Systems
was sold for hundreds of millions of dollars before it generated
it first dollar of revenue? Don't you secretly pray that Bill
Gates or a similar industry leader will come knocking?
Be
honest. Isn't this the business you would really like to be in?
Cashing out. Then, you can build your own sailboat or open a resort
in the Grand Caymans.
So,
abandon the frog's life and assume the role of a stallion. Be
proactive to plan for a sale. Take action now to properly
position your company for its sale.
Since
you probably don't have .com in your name and you may not have
buckets of computer code for astronomical valuations, it is probably
wise to position your company now for its sale.
Buyers
look for a number of intangible qualities including organization,
growth opportunities, reputation, market conditions, and industry
leadership. By documenting improvements that a buyer can make
with new capital, you can better present your company and thereby
increase its perceived value.
The
Deal Makers of our firm are intimately familiar with frogs. We
coach seller frogs to jump before the water gets too hot, and
we continually kiss buyer frogs to find just the right "prince"
of a buyer.
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